#858 – The Expat Files: Legal Nuances, Real Estate, and Cost of Living in Latin America

Automatically transcribed from the original recording; names and wording may contain errors.

[00:00] South of the border down Mexico way That's where I fell in love when the stars above came out to play and now I wonder Hello there all you ex-pat wannabes. I'm Johnny Mueller and you're listening to the expat files living in Latin America The show that tells you just what it's like to live work play and or retire down here in Latin America It's a mix of the good the bad the ugly and the great and it's all right here. So let's get started Alright and the emails keep coming in this one from mr. A he's a lawyer and abo gado from Atlanta, Georgia By the way, I've got a that's a good word to know because when you're in Latin America You'll see those signs and shingles plastered up everywhere. It won't say lawyer

[00:47] It'll say avo gado, which actually means advocate In fact, if you write out the word abo gado, it really does look an awful lot like the word advocate Except there's a B where they're supposed to be a V. Of course It also looks a hell of a lot like the word avocado, too. Yep. Avocado. That's a good memory aid, huh? Now expat it he says that's because the older a Latin lawyer gets the more he physically resembles one Hey, I'm not gonna argue that So kids today's word is abo gado and that's what lawyers were called throughout the centuries in the English-speaking world, too Fact if you check out translated ancient Greek and Roman law and philosophy I mean who doesn't do that in their spare time, right? You'll see they don't use the word lawyer. They use avo gado

[01:32] Advocate anyway in this email our gringo abo gado from Atlanta Mr. A is responding to one of the previous shows where a guy named Joel was writing in saying that His brother had all his bank accounts locked up sometime after he got into an accident where he rear-ended a guy Yep, the guy's life was completely destroyed one day He woke up and found out his bank accounts were frozen all of them So our abo gado mr. A writes Johnny. Here's the thing He says had Joel's brother spent a hundred fifty bucks a year on a million dollar umbrella insurance policy He probably would have been fully protected then he says a five million dollar umbrella policy would run about five hundred bucks a year So much easier than worrying about transferring assets out of a country

[02:20] That would be my advice and one of the best bangs for the buck you could get All right me Johnny here. Now, let me throw in my dose sent Davos Well counselor under normal circumstances, I'd agree with you, but these aren't normal circumstances or normal times I'm not disputing the part about having umbrella coverage is the best bang for your buck in life It probably is but the whole point here and the reason people listen to this show is because they're looking to get the hell out Or at least have a plan B to bank on a way out of dodge when the Mierda hits the fan up in the States When that happens and it will there'll be plenty of panic chaos and confusion going around more than enough for everyone believe me, it won't be pretty and you can be sure one of the first things government and

[03:08] Institutions like banks are gonna do is put the brakes on people wanting to transfer their money and assets out of the country The last thing the US government wants is for their sheep to leave the barn That's why it's prudent to get at least some of your assets out of the country while you still can and while the pressure Cookers still on simmer that way when chicken little is finally right You can just get on a plane or get in your car head south of the border to your plan B Destination of choice where everything's been sort of pre-arranged. You've got a network. You've got assets You've got some friends and acquaintances you can lean on and a new life sort of already mapped out for yourself So counselor when you say it's so much easier to have a 1 million or 5 billion dollar umbrella insurance policy To protect you your assets and your business up in the states

[03:54] You say it's so much easier than worrying about transferring assets Well, you're a hundred percent right about that if you expect society in the world to ramble along the way it's been doing Unfortunately due to circumstances way beyond our control. Sorry to say that ain't gonna happen There are some massive bumps coming up in the road That's what's having a plan B and at least getting some of your assets out of the country is all about So counselor when you say having an umbrella policy is so much easier than worrying about transferring assets I'd say it's so much easier for Americans and first world people to just not think about this kind of stuff The thought of it all is not pleasant and way too distracting That's why 95% of people prefer to remain on their treadmills, even though it's slowly killing them

[04:39] You know the old saying better the devil, you know than the one you don't All right Then mr A our first world lawyer says Joel the guy who wrote that email about his unfortunate brother was also wrong when he said drivers of Vehicles who rear-end people are always liable in the collision Then he says we lawyers don't understand this misplaced assumption by lay people every state I'm aware of has a negligence code section and case law that provides that the lead vehicle the one in front that gets rear-ended Oh is just as much a duty to the following vehicle as vice versa Then our counselor throws in the usual legal disclaimer Remember this does not constitute legal advice. That means he's not BS and us He's covering his back and he truly is a lawyer and not just playing one on this podcast

[05:28] Then our counselor finishes up the email by saying Oh and Johnny enough of the solar and power episodes, please Alright counselor point take it noted and filed By the way, mr. A about you pointing out the fact that even if you rear-end someone you're not always the one who's a hundred percent liable I was actually more than curious about that myself. So I looked it up on a legal website, which also was loaded with disclaimers Here's what I found out and I'll try to unwrap the legalese It says it's possible the driver of the car that gets rear-ended to be negligent Consider the following scenarios that complicate things and put this in question Number one a driver reverses suddenly and you hit them Two a driver stops suddenly to make a turn and fails to execute the turn and you rear-end them three a driver's brake lights

[06:21] Do not function and you rear-end them for a driver gets a flat tire But does not pull over and does not engage the vehicle's hazard lights in each of these cases the driver of the car that gets Rear-ended would likely be considered partially negligent to much depends on how your own state Treats accident situations where more than one party is at fault Hmm sounds like it's time to put on the waiters. It says comparative negligence versus Contributory negligence. That's the question. It says a few states still follow a harsh Contributory negligence system, but most all other states have adopted comparative negligence Which is further broken down into the categories of pure comparative negligence and modified Comparative negligence and this stuff goes on and on for pages and pages ad nauseam

[07:11] Which is why I still like that good old joke that goes like this What do you call a bus full of lawyers at the bottom of a lake a good start? Hmm and my favorite lawyer joke of late a rabbi a Hindu priest and a lawyer are driving down the road when their car Suddenly breaks down. They walk to a farmhouse They ask the farmer if they can spend the night the farmer says sure But I only have one room for two of you and the other guy has to sleep in the barn They flip a coin the rabbi loses and goes out to the barn a few minutes later the farmer hears a knock at the door He opens the door the rabbi standing there and says sorry You have a pig in your barn and I can't sleep under the same roof with a pig against my religion The Hindu priestess I'll sleep in the barn a few minutes later Farmer gets a knock on the door the Hindu standing there and says I'm sorry

[07:57] You have a cow on your barn and I can't sleep under the same roof of the cow against my religion Lawyer says okay. Okay, I'll sleep in the barn a few minutes later farmer hears a knock at the door opens it And there stands the pig and the cow and that's our first boots on the ground story for today Oh and thanks for the email counselor by the way, how is your plan be coming? So anyway after all that you're thinking what's this have to do with Latin America? Well, I'll tell you if you're gonna drive a car or any kind of vehicle you will get rear-ended It's just a matter of time, but it will happen. Remember Latinos have a very diminished personal space and that includes their personal space around the vehicle Now the first place you're gonna notice that is in a parking lot You know how every car is equipped with two side view mirrors and if you press on them they collapse

[08:45] Well, let me ask you how many times if you actually had to use that feature Collapse the mirror because you were so close to a car or another building in a parking lot I bet probably never and if you were let's say shopping at Walmart came back to the parking lot and saw Your mirror was collapsed in like that and you didn't do it yourself. You'd be pissed off, right? Well, if you're driving in Latin America get used to it. It happens all the time Oh and get used to the fact if you have a car in Latin America those side view mirrors are gonna get scraped scuffed and bruised even if you're extremely cautious and park well away from other people it's gonna happen and Don't think because you picked a spot in a parking lot far away from the regular traffic and the maddening crowd You'll be safe from incidents like that. You won't funny thing about Latinos

[09:31] They seem to like being close up to each other in tight quarters Which probably explains why you could park in an isolated area in a parking garage where there's no other cars around Go do your shopping come back and there's a car not only right next to you But so up close and personal that you could barely open your own door enough to get in that said Here's a great parking lot tip when you have to park between two cars always park a little bit closer to the nicest one Of the two even if they're both junks, you know one will be slightly better than the other right now with this maneuver You're counting on human nature That is the guy with the nicer car will take a little better care of his car So he's less likely to fling the door open and whack your car on the way in and out I know we're assuming a lot here and it might be a pretty big leap However, there is some logic to it even here in Latin America

[10:19] If anything, it'll make you feel a little bit better as you head out to do your own shopping Now said about that next up. I'd like to read you a segment of an email from another Canadian lister. Mr. JL He says dear Johnny I hooked some of my friends on to your podcasts and they are hyper excited to start on their plan B's They are older than I am but young in spirit. In fact, I hear they might do your seminar They love your evocative style and passion for Guatemala and Central America However, they're nearing retirement age themselves and are concerned about money as we all are as I am and Johnny Love your scattered information with the boots on the ground stories and the real cost of living They're great, but still too much to wrap one's head around sometimes

[11:08] It's like browsing one of those cost of living sites like www.numbayo.com. Have you seen those websites? They have some value And of course, it's fun to know what a bottle of milk costs or what a cost of pull a tooth But it doesn't tell the whole story about living in a particular Latin country or city My experience is strictly Mexican now and all I can tell my friends is that money Doubles in value south of the border. Maybe even triples depending where you are Depending on your lifestyle depending if you're on or off the gringo tourist trail but saying so is just so abstract to someone who's never actually been down there with boots on the ground and They won't come down anyway, because like most Canadians, I'm Canadian, so I'll speak for them. They're afraid of Mexico

[11:57] So much the better for me. It keeps prices from really skyrocketing, right? Anyway, Johnny, if I have one big request I'll ask you to perhaps dive more deeply into the cost of living Tell us in your way the way only you can do it For example, take a place that gringos know give us ballpark figures and sums we can all relate to That way we can relate it to what we have here back home in Canada For example, tell us what a million bucks means in Latin America Because by having ballpark figures like this we can easily adjust it to our own means and ways of spending Be it a half a quarter or even a tenth of that amount Johnny We want to know how far our money will take us. How long can we live on it?

[12:43] I can tell you not long ago in San Miguel Allende, Mexico Where a house these days will cost you a half a million bucks to start It's a fact that now in certain places in Mexico the way things are going prices will only go up Especially now that wave after wave of gringo baby boomers are threatening to come in now that they see their retirement Lifestyles not nearly as rosy or affordable as they once thought then he gives me some links to some first world Articles talking about how hordes of baby boomers are now talking about and deciding to move to Mexico Then he says anyway Johnny. Thanks for everything and keep the show is coming signed mr. JL Okay, mr. JL. Thanks for that first. Let's talk about San Miguel the Allende in Mexico

[13:35] It's the perfect example of one of the most gringo wise places in all of Latin America It's almost like an upscale Costa Rica on steroids meaning everything there is gringo wise and more expensive than Chicago In fact, I hear the big thing there these days is timeshares Please talk about one of the world's worst investments then again not everything has to be an investment does it? I mean look if you really like something you want it And it doesn't really make practical sense and won't make any money in fact It'll lose money like a car or a boat or a timeshare Well, we all make financial mistakes, and if you got the dough and like something why not buy it of course in those slick Timeshare presentations they'll outright lie to you about the rate of return

[14:20] They'll show you some really slick spreadsheets pamphlets and powerpoints meanwhile No one I've ever known who owns a timeshare And I know lots of gringles and expects to do has ever made anywhere near the projected return in almost every one of them Regrets buying the thing man. I'll tell you when gringo start piling into these tourist trail destinations It's like they've got the word sucker tattooed on their forehead in Benjamin Franklin Green Isn't it funny with timeshares as occupancy rates go down? maintenance fees go up some coincidence, huh just thought I'd say a few words about San Miguel de Allende in Mexico because I know quite a few gringles and expects who hang out there or did and Or had timeshares and now they're telling me even the vegetable and fruit markets are gringo expensive come on three bucks for an avocado

[15:13] Meanwhile when you're well off the gringo tourist trail you go to one of those big farmers markets And they've got avocado sometimes two three four for a buck even a certain kind of avocado. That's as big as your head Yep, they've got some varieties though. They never make them up to the states I think they're just too fragile depending on the season you could pick up one of those four from 20 to 50 cents and man I'll tell you it's impossible to eat a whole avocado at one sitting not one of those big monsters Now if you've never really had boots on the ground in Latin America You've probably never seen those giant avocados expat Eddie calls them dinosaur eggs I know I know you had to be there anyway JL's pushing me to give some more boots on the ground real-life examples of the cost of living I'm glad he brought that up because I've been getting slews of emails lately from people asking me about real estate again

[16:03] You know we're talking about the pockets of real estate bubbles all throughout Latin America Especially in places that have been pumped up for gringos mostly by rags like international living That said in the interest of keeping your current on prices in some of the more desirable gringo expat locations Even though I don't recommend it myself I think it's time you know exactly what prices are like in some of the places international living is really pushing For example today. We're going to talk about number one on many lists Medellin, Colombia Great place to visit, but I wouldn't want to live there only because the real estate is so expensive And why do you think that is because of the influx of gringos of course now as for me? I could live there all right and like it just fine if I had a place already that but some years ago

[16:51] But for those of you expat going to bees and wannabes who've decided Columbia is gonna be your plan be destination The first thing you'll have to do is come on down and get some boots on the ground and check out the real estate and cost Of living situation with your own eyes and ears and not for just a week You'll have to stay a lot longer if you really want to suss things out Especially if you're looking to build or buy you don't spend that kind of dough on a place You haven't been do or even speak the language Unless you've been down with active boots on the ground for at least a month preferably six months then again You know things aren't getting any better up in the first world And you have to act quickly of course you know one of the best ways to diversify your assets is to buy some real property in Latin America It could be land a house a condo a farm a commercial building not to mention an investment like that

[17:41] We'll put you on the fast track to getting your residency quite quickly, but we'll get into that later anyway Let's do a little real estate and cost of living analysis for people who want to go to Medellin Colombia and I don't mean just for a vacation I mean coming down and actually renting a furnished apartment because that's what you want to do get some quality boots on the ground and Stay for an extended period of time That's the ultimate plan for many gringos and expats Especially the over 40 crowd who have the means to diversify their assets and buy some real property of course that means Transferring some or all of their liquid assets down to their Latin country of choice now Let's face it. You don't want to transfer down a big chunk of cash and just leave it in a bank account or maybe you do

[18:26] But I wouldn't I think it's best to divest and spread it around Could be any number of things land housing real estate apartments cryptocurrency gold a business Diversification is the name of the game. All right, so let's say you've never been to Medellin, Colombia But you've heard so much about it. You read International Living Conde Nast Traveler escape artists dot com And everything AARP puts out about retiring and living in a foreign country You've looked at their top ten lists and Medellin Colombia is always a front-runner So you decide to come down to Medellin for a couple of months to check out the situation Well, you know, you'd be nuts if you didn't move into a furnished apartment Unless of course, we got a friend down there who will put you up now

[19:11] You could go with Airbnb, but they're always a lot more expensive than searching on other local sites Of course, you could stay in a hotel, but that's rather expensive and inconvenient They won't have a laundry or kitchen that so you'll be going out to eat all the time and that'll get real expensive Alright, so we're gonna assume, you know a lot about Medellin, but you've never been there At least you know what those rags and blocks have been telling you and you certainly don't speak enough Spanish So you'll want to be around other gringos for the comfort factor In other words, especially if you're an older close to retirement person You want a nice soft landing when you first arrive. There are four main neighborhoods for foreigners, gringos and expats in Medellin They are El Pablo, Estadio, Lorales and Envigado Those are the four neighborhoods that are heavily gringoized and where you're gonna find almost all the furnished apartments in Medellin

[20:03] Tell you right now everyone wants to live in Pablo So you're not gonna find any rental deals there But if you keep a sharp buyout, you'll find some deals in Lorales, Envigado and Estadio So then how do you locate these deals if you don't know anyone who lives in Medellin? Well usual suspects Airbnb, but like I said, they're usually the most expensive Then there are a few other recommended sites on the net one's called all the rooms all one word ones called Casacol, C-A-S-A-C-O-L. They generally have more than 500 furnished apartments listed at any given time Then there's always the Medellin fake book groups for gringos and expats They've got a pretty active real estate section including furnished apartments Well and a couple more things you should know in South America

[20:48] The pricing will vary depending on the time of the year with the whole month of December the first week of January and the summer months of July and August the most expensive times to book Something else you should know Generally the minimum rental period of a furnished apartment is a week with around half of the rentals requiring a 30-day minimum now as with most furnished apartments around the world you'll have to give a security deposit to except if you're using the Airbnb Now the average security deposit in those four most desirable neighborhoods for gringos and expats go something like this in Pablo the most gringo eyes and expensive of all around 250 bucks, but then again, you're supposed to get that back at the end, right? Hmm insert laugh track here. Maybe all right then the neighborhood of Envigado

[21:35] It's around 200 bucks for the security deposit then in the Estadio neighborhood 175 in Lorales around 200 Right away that gives you an idea of the price differential in those neighborhoods Oh, and you'll also find almost all furnished apartments come with a cleaning fee your average cleaning fee 75 bucks what a ripoff huh? Especially when they're paying a cleaning lady something like 15 to 20 bucks a day if that you know I've been in and out of rentals myself and it takes them around two to three hours to clean one still in some luxury furnished apartments in Pablo you'll pay five hundred bucks for a cleaning fee Talk about first-world prices and beyond Wow Hell give me a bucket and some knee pads and I'll take that job

[22:22] By the way, you could break down the city of Medellin into around 16 communities neighborhoods or comunas with only four districts As mentioned that are pretty much loaded with gringos with Pablo being the most desirable by far and here are some of the stats The average price of a one-bedroom furnished apartment in El Pablo per night is around 60 bucks So rental by the month there around two thousand bucks a two-bedroom apartment rental in Pablo Average 90 bucks a day. So again by the month you're looking at almost three thousand bucks Whoa, and a three-bedroom furnished apartment around 120 bucks a day now, you're well over three thousand bucks a month Oh and the average security deposit for an apartment in El Pablo is around 250 bucks, which you're supposed to get back. Haha. Oh

[23:13] By the way, all the information I've given you right now is compiled from rental statistics since January this year 2019 over an average of around 1500 different apartment rentals And of course the longer you stay the better deal you get that is up to a point Suppose you've rented for one month and you want to continue to rent another two or three months Then you can make a better deal And of course if you're looking longer term like six months you can lop off another ten or twenty percent if you pay cash up front But you knew that already right anyway I've given you a pretty good breakdown on Pablo the most expensive and gringo wise district in Medellin in fact all of Columbia Now let's talk about one of the other four districts. That's quite desirable for gringos yet much less expensive Let's look at the district your neighborhood called Estadio now remember Medellin has a cheap and clean subway system

[24:03] And you want to be near that if you're gonna rent for sure Because it's a very big city something like five million people in the metro area spread out And if you don't take the metro once in a while Ubers and taxis will kill you the cost of a one-way ride on A metro around 75 cents the cost of an uber or taxi Could be four five even ten bucks going the same way same distance all right So here's how the rents break down in El Estadio the average price of a one-bedroom furnished apartment is around 25 bucks a night again about a half of what you'd pay for the same thing in El Pablo Then you've got the average price of a two-bedroom apartment around 35 bucks a night three-bedroom apartment about 50 bucks a night Four-bedroom who'd ever want that but 90 bucks a night all just around half of what it caused you to stay in a furnished apartment in

[24:50] El Pablo then of course there's the security deposit around 175 bucks and the average cleaning fee about 25 bucks so for you gringo expats and wannabes who are thinking about going to Medellin if That happens to be your final plan B destination well the truth is almost every gringo and expat wants to live in Pablo But man, it's just way too expensive Unless of course you've got the dough, and you don't care the other neighborhood options for gringos in Medellin Gringos who can't speak much Spanish that is and want to be in and around gringos and English speakers you've got the other three recommended neighborhoods and Vigado Estadio and Loralis and note just as the examples I gave you with the neighborhood El Estadio The other two and Vigado and Loralis are about 50% cheaper than El Pablo

[25:41] Bottom line the trick is to get some boots on the ground and stay in the country at least a month Preferably six months before you ever buy anything or you'll regret it You'll be sorry and the thing about Medellin Colombia, which is the city that's most popular with gringos and expats these days There aren't that many furnished apartments at all to be found outside of those four districts I just mentioned now of course if you go on the Airbnb sites, you'll find everything's furnished That's what Airbnb is all about except the prices will usually be a bit higher than some of the local real estate and apartment listing sites I mentioned a few of those earlier including the Medellin fake book gringo expat groups But still my all-time favorite in-country buy-and-sell website if you speak Spanish and are looking for anything and everything

[26:27] It's olex.com and if you're looking at Columbia It's olex.com.co. Have a look at it See the pictures and note any time you're interested in anything and you want to contact or chat with the seller If it's some kind of product you're looking to buy or a landlord because you're looking to rent He'll automatically give you his what's up number and ask for yours That's how you'll be communicating with him from then on so you better have what's up Alright next show will go into details on how to buy property land apartment condos, whatever We'll be discussing the ins and outs of buying not renting So stay tuned for that but right now since we're getting towards the end of the show I want to remind you of my upcoming July 2019 expat insider seminar You've got till June 1st to get in on the early bird discounts and save $500 a person

[27:17] You can read all about it as well as the famous John Gulf post seminar trips and how to kill tubers at one stone That is get your Guatemala residency started while you're at the seminar Just go to www.thenewexpat.com You've been listening to the expat files living in Latin America If you need some help with your own plan B, you can schedule a one-on-one phone call with me But first download my free plan B questionnaire at www.thenewexpat.com Better yet if you want to get your plan B going from right up there in the States Just sign up for my 9-hour expat essentials course Get the perfect plan B blueprint by going to the expat files.com slash academy most famous